Assignment Taken

Fund Raising for Virtual Electric vehicle company Velo Motors Pvt Ltd.

Case Understanding

Since India has a low market share for electric vehicle and looking into the long term renewable energy goals of the Government, 30% to be exact we need to build a company from scratch keeping in mind the short terms and long terms goals, and most importantly the wheel of finance. The cornerstone is the FAME method here. We have already created a prototype of electrical vehicle and we will go with this model for our initial launch. To establish a business, we need strong financial base and these are the following reasons for which we need to be proactive in terms of fundraising strategy. 1. Personal investment of 46 lakhs This is the most appealing investment option since we are not at the position of owing anyone else in the business. If the business fails all the hard work, investment and time is wasted in vain. Seeing the urge to take out an average monthly salary of 50000 it is very difficult to plan the Setup of the Workstation and other fixed charges within 46 lakhs and in this process we may miss out the mentorship of angel investors and venture capitalists. 2. Loan of 60 lakhs at fixed interest rate of 16% per annum This requires a lot of documentation works and the process can be tiresome and time consuming sometimes. Loan at the rate of 16% may not be the best option available and it may cloud your decision making ability at the time of crisis (if happens). The money had to be paid back irrelevant of the situation whether the business fails or succeeds and if failed may lead to loss of assets. It’s a risky option unless and otherwise taken meticulously. 3. To incorporate additional charges It’s not going to be that easy to run a business under cash crunch. To accommodate the definition of start-up cost, fixed business costs i.e from premises and insurance costs to stock and staffing and finally the variable costs we need a whole lot of external funding including the personal investment and loan.

BCS Solution Summary

We are a case of start-up with brilliant business idea whose aim is to make it operations up and running in the most efficient way possible. For a start-up like us funds appears to be the most important factor in deciding the current, mid-term and future goals. Different Fund Raising Strategy: 1. Participation in Design Challenge Competition 2. Participation in Green Business Forums, Environmentally Friendly Vehicle Conference(EFV), Exhibition/Exposition on energy efficient products to promote our brand among investors and awareness for Electric Vehicles. 3. External Series Funding a) Series A Funding b) Series B Funding c) Series C Funding 4. Using Fundraising platform like Raise My Start-up. 5. Fund raising through social media 6. Collaboration with Campaigns of Big Brand and Crowd funding

Solution

Initiative

1. The company should participate in various Design challenge across the globe to compete with the best minds to come up with the most innovative prototype in most efficient way feasible. The senior management can have a box of innovation where the employees can share their ideas and based on that we can participate in various Design Competitions on the principles of STEM at the initial stages of the Start-up under the flagship of Velo.

Unity of Direction

1. There are various events organized by Society of Manufacturers of Electric Vehicles (SMEV) throughout the year to promote and create awareness for Electric vehicles through participation in Green Business Forums, Summits, Conferences on Climate Change, Environment friendly Vehicle Conference (EFV), Exhibitions and receive Certificate of Excellence. Some of the upcoming events where the company can participate includes Electric Vehicle Fair 2020, World Environmental Expo, Electrical Vehicles and future Mobility Show, Chennai Trade centre. The company can participate in these events to attract investors under the logo of Velo.
2. Funds for the start-up can be raised in phases keeping in mind our growth targets and financial needs. After consultation from the finance department we can work in this direction.

• Series A Funding

As per market valuation we require an amount of 1Cr. and this can be partially achieved by Series A funding (i.e 73 lakhs) as by then it have established a reliable customer base (even few) because of its high rated key performance indicator. The investors will notice our presence through our participation in forums and excellence at national platforms. At this stage they would like a share in equity and hence they don’t just search for great ideas but also look at the strategy of the entrepreneurs, how they are turning it into a successful business model.

• Series B funding

The Company can implement this funding strategy at a later stage say, just at the transition phase between development stage and expansion stage. At this stage we are arriving at an estimate of having a market valuation of about. We can achieve this by having a key anchor (investor) who could attract new wave of venture capitalists.

• Series C funding

The company can plan for the third phase of fund raising strategy at the end of five years when the company would like to scale its operations many fold in an effort to get more than the amount it invested back.

THE START-UP LIFE CYCLE

•  Using already prevalent Fund raising platform “Raise my Start-up”

There are many platforms which are regularly visited by people who wants to invest their hard earned money in organizations who are working towards a global agenda like clean energy vehicles to achieve sustainable development goals. These platforms arranged one-to –one interaction between start-ups and investors, Fire side chat on mobility, Networking and much more.

• Fundraising through social media campaign

This seems to be the cheapest way for marketing and let investors feel your presence in the world at a large.

Subordination of Individual interest

1. Collaboration with Campaigns of Big Brand

Being a budding start-up until the company makes its own brand name at the initial stage it can raise funds in collaboration with big names like Maruti and Honda which are already well established businesses by organising marathon and other fun raising events.

Crowd funding is said to be difficult for Electric Vehicle start-up we can learn a lot from organizations like Sono Motors but this have its cons too since it is going to slow down the growth for some time.

Conclusion

The Funds invested by the Investors will help in smooth implementation of the company’s initiation, Planning and execution strategies. By Participating in competitions we will always be in a constant learning process and hence will harvest every scope of improvements. The Series funding will boost the execution process with the much needed financial support in phases. We need to pump money meticulously into the business through expert advice from the finance department. With innovative ideas and financial support, we are good to go in this race for most affordable Green Energy Automobile Company. References: 1. https://techcrunch.com/2018/11/28/chargepoint-raises-240-million-to-serve-an-anticipated-flood-of-electric-vehicles/ 2. https://yourstory.com/2019/07/electric-vehicle-startup-smarte-mitsui-ev-funding-india 3. https://www.investopedia.com/articles/personal-finance/102015/series-b-c-funding-what-it-all-means-and-how-it-works.asp 4. https://thetechpanda.com/seven-types-of-funding-sources-for-your-startup/11238/

Attached File Details

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